Name Rizwan Iqbal

Class BBA

Semester 5th

Roll No BBA-F17-048

Topic Entrepreneurship Development in Pakistan

Submitted to Sir Jamshaid

Due Date 14/04/2020

Introduction:

Entrepreneurship is a combination of innovation and risk

taking. When such activity thrives, high growth rates are achieved as well as

opportunities offered to all of society, including the poor. They offer benefits

through growth and employment. In Pakistan innovation and risk taking is

severely inhibited by the intrusive role of government of country. From the

starting days of strategy when protection and subsidy policies determine

winners in the market entrepreneurship has been diverted to government

favors. Government’s economic policy is also seeking to promote growth

through a basically “mercantilist” approach where local commerce though

serious neglect is regulated.

This sector either employees most of the poor or offers them entrepreneurial

opportunities although deregulating this sector could be a priority in an anti-

poor planning. To development of an entrepreneurship culture in the Pakistan,

the system of laws and policies that are promoting it will have to be

dismantled. Entrepreneurship development as a conscious mechanism in

Pakistan is a recent post-colonial phenomenon. This has been an exciting

period in which international aid was sought with the purpose of achieving

economic development. The International networking of research fledgling

local counterparts dedicated themselves to developing policy instruments for

delivering this noble purpose. Sadly, even after 60years poverty persists and

other countries, like Pakistan, are caught in poverty.

Entrepreneur growth requires institutes prerequisite which underpin human

transactions. Those prerequisite are those that human civilization has evolved

over the many years. Economical aid is working only where the policies and

institutional environment is good. This again lends support to the “primacy of

institutional” arguments. A society that gets the institutional set up described

above goes on to achieve economic development. Entrepreneurship may be

directed towards the accumulation of wealth through unproductive enterprise.

The system of incentives that a country sets up in its governance mechanism

can either promote healthy entrepreneurship leading to economic growth and

prosperity or rent seeking where productive activities are at a discount. In the

latter case a society gets stuck in a law poverty-low growth trap.

In Pakistan, the policies have always been biased towards the high class of

country. This is true of the economical policies which have been biased

towards the high scale sector. Rather than entrepreneurship policies are

planned for investors and investments became the norm. Incentives were

offered to attract investments. Such incentives included licensed monopolies

in protected markets, cheap land and credit and subsidized inputs. Promoting

entrepreneurship has its own importance. According to Global

Entrepreneurship Monitor’s 2010 report Pakistan lags in startups with less

than half the rate of early-stage entrepreneurial activity found in other factor-

driven economies. Such part of the problem is that most young people coming

out of universities prefer searching for a job instead of exploring

entrepreneurial career opportunities one of the key finding of the CIPE

dialogue with students and start-ups. Even young people who choose to enter
paid employment often have trouble finding a job are badly paid, or wind up

in casual informal jobs, according to the world bank.

Entrepreneurship:

 “It Is the process of designing, launching and running a new business,

which is often initially a small business is known as the

entrepreneurship”. The people who create those businesses are called

entrepreneurs.

 Entrepreneurship has been described as the “Capacity and willingness

to develop, organize and manage a business venture along with any of

its risk to make a profit is called entrepreneurship.”

 Entrepreneurship typically focus on the launching and running of

businesses, due to the high risks involved in launching a start-up, a

significant proportion of start-up business have to close due to “lack of

funding, bad business decision, an economic crisis, lack of market

demand or a combination of all of these are called entrepreneurship.”

 “The entrepreneur is able to recognize the commercial potential of the

invention and organize the capital, talent, and other resources that turn

an invention into a commercially viable innovation.”

 In this sense the term “Entrepreneurship” also captures innovative

activities on the part of established firms, in addition to similar

activities on the part of new businesses.

 In this usage, an entrepreneur is an entity which has the ability to find

and act upon opportunities to translate inventions or technologies into

products and services.

 Main Structure of Entrepreneurship:

In Pakistan, policy has always been biased towards the elite. This is

especially true of the economic policy which has been towards the large scale

sector. The result in that this sector has developed on the incentives of rent-

seeking rather than entrepreneurship. They have further four types which are

given below with detail.

a) The Big Push for Industry

For most of the time since independence, “enterprise” for the

government was synonymous to large industry only. Various policy measure,

such as tariff protection, import licensing schemes and other controls on

imports, rather than enhancing productivity or encourage industrialization for

growth, instead adversely affected the country by giving rise to a new elite-not

entrepreneurs but rent seekers. The government policy was never neutral and

favored industrialization throughout.

The period, 1947-1958, was that of emerging exchange rate and trade policies

and import substitution industrialization. Although in its first five years after

independence, the country achieved impressive growth rates despite the non-

existent base and the odds that existed. From 1953 to 1964, “Virtually all

imports into Pakistan were regulated by some form of quantitative controls”.

With controls imposed on imports, especially on consumer goods, the prices

of such commodities rose sharply in the domestic market causing a change in

the terms of trade in favour of industry and against agriculture, resulting in a

sharp increase in the productivity of the industrial sector. As a result, industry

became a lucrative sector and traders converted their merchant capital into
industrial capital and hence marking the beginning of industrialization process

in Pakistan. The large scale sector experienced phenomenal growth rates of

over 20 percent during 1950-55.

b) The Neglect of the “Small”

The historical evidence clearly indicates that, in the context of

Pakistan, when one talks about industrialization, for most people it implies

large plants and factories run by machines and employing a large number of

workers. It definitely comes as a surprise to people when they discover the

reality, that it is actually the informal sector and the small scale sector that

dominates our lives,14 both of which have been continuously ignored in our

economic policies. Today almost 40 percent of business takes place in the

informal sector and still as compared to the large scale industry, the small

scale enterprise and industry continues to face unfavorable policies. Neglect of

the sector on part of the government is evident from the fact that even today

actual growth rate of the sector is not computed and instead it is merely

imputed. The small scale and the informal sector may be much more dynamic

and productive than what government figures have continued to show till

today. It is also important to note that the small scale sector is the breeding

ground for innovation but continues to attract little research. Historical growth

rate of small scale sector, also point towards the neglect of the sector. From

1950 to 1962, the small scale manufacturing sector showed a consistent trend

of only 2.35 percent growth, followed by a stagnant figure of 2.95 percent

growth rate over the next 8 years! Similarly, from 1977 until recently, again a

consistent trend of 8.4 percent growth rate has been noted.

 From the 1990s, this trend further fell to another stagnant 5.3 percent

growth rate. Despite the fact that informal sector is labor intensive, the sector

has not received the attention that it deserves. Labour intensive nature of the

sector is evident from the fact that though the share of the urban informal

sector rose by 3.6 percentage points between 1972 and 1986 the employment

in the sector showed an annual increase of 4.3 percent during the

corresponding period. Generally, the informal sector and the small scale sector

in Pakistan has dominated employment in the construction, wholesale, retail

trading, hotels, transport, communications and storage industries in urban

areas. Interestingly, if we consider the institutional framework within which

our industry has been developing, one or the other government institutions

established solely for the facilitation of the small scale industry and enterprise

have always been there.

c) Agriculture and the Elite Bias

Agriculture growth was impressive in each of the green revolution

years between 1960 and 1970. The main elements of the green revolution were

tube wells, tractorisation and High Yield Varieties (HYV) all the elements

have been a source of rent-seeking. First, inducement to invest in tube-wells

was given to farmers through large public subsidies on fuel, installation and 13

maintenance costs. Besides this, the Agricultural Development Bank, followed

a liberal credit policy and made numerous loans to farmers so that they could

set up private tube-wells. Similarly, according to Akmal Hussain 15 the

purchase and use of tractors were encouraged through the cheap availability of

credit. On the top of it the overvalued exchange rate made tractors available in
Pakistan at below world market prices. Finally, High Yield Varieties of food

grains were provided to farmers at subsidized prices.

Given the indivisible and large capacity of diesel and electric tube-

wells even the middle level peasants were not able to afford their fixed and

variable costs.16 Thus seventy percent of the tube-wells were put in by

farmers owning 25 acres or more. Similarly, tractors were not feasible for

small farmers and the benefits of HYV required plenty of water therefore its

benefit was available only to the large farmer. Summing up, it can be noticed

that the beneficial effect of green revolution, that has been the case of

incentives from the government, remained restricted to rich farmers only. In

words of Akmal Hussain, “The new technology made it possible to accelerate

agricultural growth substantially through an elite-farmer strategy” which

concentrated on the new inputs on large farms only.

d) Subsidies for Export

While the rhetoric has always been the growth of exports, policy has never

quite embraced openness. For the promotion of exports large government

machinery is maintained while there are several subsidy schemes that have

been tried over the years. Currently there is an export refinance scheme which

allows exporters access to concessionary finance a duty drawback scheme

which refunds duties charged on inputs used on exportable and a freight

subsidy.

My Personal Opinion for Entrepreneurship

Entrepreneurship comes in two phases “Connection” and “Opportunities”.

When I am an entrepreneur I get to connect with different people to help me

and teach me, as well as give me ideas on improvement I also believe that not

all entrepreneurs will succeed their first time. Some will fail, no matter how

good I am there will be flaws. Therefor I think the process is an opportunity

for everyone to learn and grow. Entrepreneurship means creativity and the

ability to use new ideas to make a difference in our community by addressing

a need or creating a socially business.

I think entrepreneurship means finding a problem in me or others face every

day and thinking of ideas to solve it. Entrepreneurship is new innovative ideas

that can help improve society economically socially. It helps people to create

ideas that can solve social problems and gives them the entrepreneurial spirit

to search out success. Entrepreneurship is a way of thinking the essential parts

of the entrepreneurial mindset are risk taking and activation. Firstly, I must be

able productively collaborate strengths and weaknesses within a team I must

be able to think outside the box. Which sometimes involves risk. I must be

tolerant to risky ideas. There would be no such things as entrepreneurship

without activation which is turnings your thoughts and ideas into reality. It is

beneficial for teenagers to continue their business but they have to be careful

from getting lose in their business.

I believe it is finding and taking advantages of hidden opportunities to result in

positive outcomes. Entrepreneurship equals intellectual freedom and the

ability to be self-reliant. This priceless feeling of dictating the direction of my

work is what keeps me going every day. I am pectinate about technology but I

am also pectinate our brand and the ability to differentiate ourselves in the

market place. Being an entrepreneur is not for everyone. What I would share

with young entrepreneurs is that things may get hard along the way and doors
may close in the front of you. “you must internalize it and you will be

successful’.

“Entrepreneurship is a way of life, a revolutionary way of enhancing your

manner of critical thinking. To me it means the future. To be an entrepreneur I

have control my own life, as well as everything in and around me. It is the

ticket to economic, financial and personal freedom.” “The thing you pay no

attention to might make you a millionaire”. (Sara Blackely).

In my opinion, entrepreneurship in general means to create an atmosphere of

success in business, coming up with new ideas as well as creating a base for

economically setting a value creation. As I am mod in a related group, the

international entrepreneurs club, you may also have look at some articles on

that resource, and even fell free to join this group and comment this

discussion. As we state the demand on the free basic principles for an

‘innovative startup’ to succeed. They need to be innovative market driven and

scalable. Innovative as regarding belonging to a special market branch like

biotech, nanotech, etc. Which is often found as an entrepreneurship. To come

up with a business idea, it needs to be a new product in contrast to what I find

on the market, it needs to be a market-driven projects, I will have to know

about our market and target group do market research for setting up a

marketing strategy and most important help satisfying existing consumer

needs and finally it needs to be scalable at least this means I might expand to

ne target groups or open up new horizons by creating new country braches

abroad. In a wider sense it could also be entrepreneurial to start a restaurant

with no distinction to other restaurant.

It means being able to do what you love the most without the fear of failing.

All you have to do is enjoy the experience that it brings and everything will be

fine. I am quite sure that well have a lot of synergy effect and people ready to

contribute it. Posting an article there was a great idea and I hope we can

generate more response there. I you can miss activity you might also post

country related articles with invitations to join the group on a regional base at

the different country subsection o the group board. Direct contact also helps to

promote our cause as well. You can have your own view of the world and

entrepreneurship is only the venue where you pursue that view and see the

fruition of your vision. Self-employment allows you to do your own thing and

pursue those areas that you feel passionate about us.

As your own boss you work when you want and stop it you can stop. You can

tailor your work according to your lifestyle and accommodate various tasks.

The entrepreneur often wears many hats the strategic planner the market

customer service rep and the sales rep even the bookkeeper. Entrepreneurs

face tremendous challenges and experience incredible joys when these

challenges are overcome. If you crave excitement become an entrepreneur.

Entrepreneurship is tough. There will be moments where you will question

yourself or your decision going into the business. Sometimes you’d even think

that you couldn’t do it when the obstacles seem insurmountable. But once you

succeed and overcome the challenges you again renewed confidence and

respect for yourself that you can do it.

As an employee no matter how hard you work the financial remuneration you

receive is limited to your salary and occasional bonus. As a self-employed

person you can earn so much idea and execute the business well the potential
financial windfall is so much higher as an entrepreneur rather than a corporate

person. Working in entrepreneurship is inspiring instead of being a cog in the

wheel for a giant hierarchical corporate you are able to see your ideas make a

difference and contribute to the construction of a brand new business.

A career in entrepreneurship is not for just anyone. This demanding and

exciting field requires passion focus and the willingness to take risk.

Entrepreneurs take problems or inconveniences in life and see them as an

opportunity to create a product or service. Though entrepreneurship can often

require long hours the benefit of building a business I that you are in charge of

deciding when you want to work. Instead of the monotonous 9-5 set-up you

are able to have more independence and freedom it is not that you are doing

less work but rather that you are able to choose when you want activities in

your life.

Conclusion

If entrepreneurship is to develop and be at the root of development in the

country, it is imperative that there must be deep government reform which

limits rent-seeking, encourages innovation and fosters enterprise. The

following is recommended. Much of the historical experience and global

research has shown that no society can progress without developing rule of

law. Once rule of law is strictly in place, the state has no favourites and rent-

seeking efforts dissipate. This is the basis of moving from a system of

competing for state favours to one of market competition. The role of

government must be to provide rule of law, law and order and a legal and

judicial system that enforces contracts. As discussed above, the development

paradigm pursued so far, the government to consider it expedient to neglect

these magisterial functions in a bid to improve welfare and prosperity. The

government machinery that in the past would provide these magisterial goods

rule of law and order and legal and judicial framework to support the market

has for too long given a higher priority to development projects. The result is

that market competition does not take place on the basis of product

development and consumer preferences but on unfair practices many of which

involve influencing the government. This environment has eroded trust,

society and the community.

There is a need to stop the policy of ‘sector-picking’ and providing

incentives to support it. This would mean opening out the economy

including removing tariff protection for favourites . No industry or group

would be protected through government subsidy. Defaulting businesses

and those that had experienced market difficulties would be dealt with

according to market means even if it means a business failure.

· The civil service and all government service will have to be reformed so

that the malaise of corruption and rent-seeking can be eradicated. This

will obviously involve setting government salaries in line with the market

while eliminating all non-transparent means of payment either through

perks or cheap land. All payment should be in cash and in one lump sum

and no tax-free unobservable allowances. Needless to say this will have

to be supported with open entry into the civil service at all levels.